By Staff Reporter
KARACHI: Pakistan is poised to satisfy all seven quantitative performance criteria set by the International Monetary Fund before the second semi-annual review of its $7 billion Extended Fund Facility program, according to a report from brokerage Topline Securities.
The IMF team is due to arrive in Pakistan on Sept. 25 to evaluate the nation’s progress under the arrangement, focusing on economic targets for the March-June quarter.
Based on Topline’s estimates, Pakistan is likely to meet the IMF’s quantitative performance criteria, including targets related to net international reserves and swap positions. The primary balance numbers for fiscal year 2025 are also well within the IMF’s projections, the report noted.
The review comes as Pakistan pushes ahead with IMF-mandated reforms while courting foreign investment in nascent sectors like offshore drilling, mining and Web 3.0 technologies. A highlight was the Pakistan Mineral Investment Forum 2025 in April, which attracted more than 5,000 delegates from over 50 countries.
The report pointed to renewed US interest in Pakistan’s offshore hydrocarbon resources, which could prove pivotal in unlocking the country’s untapped natural assets.
The Reko Diq mining project, a cornerstone initiative, is slated to achieve financial close in the coming weeks.
Yet Pakistan faces headwinds from severe floods and heavy rains that have battered much of the country, sparing only pockets like Balochistan and Azad Kashmir. While the central bank has observed that the current floods are less intense than previous episodes, Topline warned that they could temporarily disrupt economic reforms. The report added that Pakistan’s resilient economy should recover from the impact in the near term.
The deluge is set to boost relief spending and squeeze government revenues, pushing up the fiscal deficit for fiscal year 2026. Topline has lifted its fiscal deficit forecast to 4.8% of gross domestic product, from an earlier 4.1%.
The Federal Board of Revenue is now projected to collect Rs13.6 trillion in tax revenues for fiscal 2026, below the prior target of Rs14.1 trillion. This adjustment accounts for a slower economic rebound and the floods’ drag on GDP growth.
GDP expansion is now seen in a range of 2.75% to 3.25%, down from the previous 3.5% to 4%. Agriculture growth has been trimmed to 2.6%, reflecting anticipated crop losses of 15% for rice and 10% for cotton from the floods.
The current account deficit is expected to hold within 0% to 0.5% of GDP. Topline has nudged up its import growth forecast to 10% from 9%, while slashing export growth to 1% from 4%. Remittances, however, are forecast to climb 6%, with any stronger inflows providing a buffer to the current account gap.
The report also signaled that the central bank is likely to maintain the policy rate unchanged through fiscal 2026, reversing its earlier assumption of a potential hike. This stance stems from risks tied to food inflation from the floods, escalating import bills and geopolitical uncertainties, including recent tensions in Israel and Qatar that could jolt oil prices.
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